Principal Judgment
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Equity Division Supreme Court New South Wales Case Name: Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 8) Medium Neutral Citation: [2019] NSWSC 1658 Hearing Date(s): 20 September 2019; further written submissions 27 September, 11 October, 1 and 22 November 2019 Date of Decision: 28 November 2019 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Judgment to be entered in favour of Mr Mackinnon against the fifth and twelfth defendants for the amount claimed Catchwords: CONSUMER LAW – misleading or deceptive conduct – loss and damage – representations found to be misleading and deceptive – whether loss claimed was “because of” the fifth defendant’s conduct CONSUMER LAW – apportionment – where apportionment not pleaded Legislation Cited: Australian Consumer Law Civil Liability Act 2002 (NSW) Civil Procedure Act 2005 (NSW) Corporations Act 2001 (Cth) Cases Cited: Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112; (1990) 94 ALR 719 Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 3) [2013] FCA 984 Australian Competition and Consumer Commission v SensaSlim Australia Pty Ltd (in liq) (No 3) [2012] FCA 939 Australian Competition and Consumer Commission 1 v TPG Internet Pty Ltd (2013) 250 CLR 640; [2013] HCA 54 Chew v Amanatidis [2009] SASC 334 Gould v Vaggelas (1984) 157 CLR 215; [1984] HCA 68 Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 I & L Securities Pty Ltd v HTW Values (Brisbane) Pty Ltd (2002) 210 CLR 109; [2002] HCA 41 In the matter of Kupang Resources Ltd (subject to Deed of Company Arrangement) [2018] NSWSC 1872 Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 7) [2019] NSWSC 103 Macquarie Generation v Peabody Resources [2000] NSWCA 361 McKernan v Fraser (1931) 46 CLR 343 Miletich v Murchie (2012) 297 ALR 566; [2012] FCA 1013 Permanent Custodians Ltd v King [2010] NSWSC 509 Polon v Dorian [2014] NSWSC 571 Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 Sykes v Reserve Bank of Australia (1998) 88 FCR 511 Travel Compensation Fund v Tambree t/as R Tambree & Associates (2005) 224 CLR 627; [2005] HCA 69 Ucak v Avante Developments Pty Ltd [2007] NSWSC 367 Wieland v Texxcon Pty Ltd; Porz v Texxcon Pty Ltd; Nominexx Pty Ltd v Wieland (2014) 313 ALR 724; [2014] VSCA 199 Williams v Hursey (1959) 103 CLR 30; [1959] HCA 51 Category: Principal judgment Parties: Ian Henry Mackinnon as plaintiff representative of 153 plaintiff group members (Plaintiff) The partnership of Anne Patricia Larter, Alan Jones, Miraleste Pty Ltd trading as USG Partner and Leigh Johnson, trading as "STC Sports Trading Club" (First Defendant) Anne Patricia Larter (Second Defendant) Alan Jones (Third Defendant) 2 Miraleste Pty Ltd trading as USG Partner (Fourth Defendant) Leigh Johnson (Fifth Defendant) Sports Trading Club Limited (a company incorporated in Hong Kong) (Sixth Defendant) Bella Development Limited (a company incorporated in Hong Kong) (Seventh Defendant) East Ocean Capital Limited (a company incorporated in Hong Kong) (Eighth Defendant) Arabella Racing Pty Ltd (Ninth Defendant) Banksia Holdings (Tenth Defendant) Arabella Louise Foster (Eleventh Defendant) Peter Foster (Twelfth Defendant) Representation: Counsel: T J Dixon (Plaintiff) Solicitors: Nelson McKinnon Lawyers (Plaintiff) P N Argy (Fifth Defendant) File Number(s): SC 2015/332497 JUDGMENT 1 I gave judgment in this matter on 18 February 2019: Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as “STC Sports Trading Club” (No 7) [2019] NSWSC 103. 2 These reasons assume familiarity with that judgment. I shall use the same abbreviations here. I will refer to the paragraphs in the judgment thus: “J” followed by the number of the paragraph in question. 3 At J829-J839, I referred to a number of further matters requiring resolution. At J840, I said: “Once the parties have had an opportunity to consider these reasons, I will invite submissions as to the further steps that should now be taken in these proceedings.” 4 On 4 March 2019, I made directions for the exchange of submissions in relation to the following questions: 3 (a) Whether Mr Foster instructed Ms Johnson to represent, and whether Ms Johnson did represent, that “Mark Hughes” was the National Sales Manager of STC as identified at J762. (b) Whether it is necessary for Mr Mackinnon and the Group Members to obtain relief in relation to various other causes of action and, if so, to develop further submissions in relation to them as identified at J831. (c) Whether Ms Johnson's failure to speak out has caused loss in circumstances where from 30 August 2013 Mr de Klerk knew Mr Foster was involved in STC and had been masquerading as “Mark Hughes” and yet did not make public what he knew as identified at J837. (d) The question of precisely when Ms Johnson’s silence about Mr Foster's involvement should be held to have caused damage to Group Members as identified at J838. (e) The issue of causation generally so far as concerns Ms Johnson. (f) The question of what, if any, findings should be made about the involvement in STC of Mr Holmes and Prof Snyder as identified at J839. 5 I misstated question (a). The question that arose from J762 was whether Ms Johnson represented to anyone other than Mr de Klerk that “Mark Hughes” was the National Sales Manager of STC. 6 I received further submissions from Mr Dixon, for Mr Mackinnon, on 30 April 2019. 7 There was delay in provision of submissions on behalf of Ms Johnson. Ultimately, on 22 July 2019, Mr Argy served a document headed “Fifth 4 Defendant’s Further Submissions re Causation and Damage”. The document contains 995 paragraphs and comprises 152 closely typed pages. 8 In his covering email, Mr Argy said that the submissions had not been prepared by him. On their face, they purport to have been prepared by Ms Johnson herself. 9 To a very large extent that document was not responsive to my direction of 4 March 2019 and sought to reargue matters that I had determined in the main judgment. 10 Mr Dixon delivered written submissions in reply on 5 August 2019. 11 Mr Dixon and Mr Argy made oral submissions on 20 September 2019. During those submissions, Mr Argy directed me to those parts of the 22 July 2019 document that he contended to be relevant to the issues remaining for determination. 12 I have received written submissions since 20 September 2019, in response to particular questions I notified to the parties. A class action 13 As I stated at J4, Mr Mackinnon brings these proceedings under Pt 10 of the Civil Procedure Act 2005 (NSW) as representative of 153 named Group Members. 14 The findings I have made about the conduct of Mr Foster and Ms Johnson answer questions which are common to the Group Members. Those findings enure for their benefit as well as for Mr Mackinnon himself. I summarise those findings later in these reasons. 15 However, all Group Members will need to prove, at an appropriate time, that they have suffered damage as a result of the conduct I have found. In that regard, I am told that the Group Members have served some 184 affidavits. 5 They have not yet been read before me. That will take place at a later hearing. 16 These reasons are concerned with, amongst other things, whether Mr Mackinnon has suffered damage as a result of the conduct I have found. Application to amend the Further Amended Commercial List Statement 17 In the Further Amended Commercial List Statement, Mr Mackinnon alleges that Mr Foster and Ms Johnson made the representations set out at J736 (being representations made by Mr Foster himself or by Ms Johnson on his instructions) and at J801 (being representations made in the Proposal). Together, these representations were defined in the List Statement as “the Representations”. 18 Paragraph 23 of the List Statement is in these terms: “The Representations were false and or misleading or fraudulent in that: a. The person describing himself as ‘Mark Hughes’ to the plaintiff and the group members was, in fact, the twelfth defendant, Peter Foster, a fraudster who had been charged, convicted, or served sentences in respect of fraud related matters in Australia, the United Kingdom, the United States of America, and Vanuatu; b. The person describing himself as ‘Tom Nolan’, the National Sales Assistant of the Sports Trading Club was, in fact, Peter Thomas Nolan; c. The first and sixth defendants did not have trading offices in Sydney, Hong Kong or London but were operated at a residence at 14 Magnolia Place, Ewingsdale, Byron Bay, New South Wales; d. Dr Allan Snyder was not the scientific director of the Sports Trading Club and neither the first nor the sixth defendant had a team of analysts or traders with professional qualifications in quantitative disciplines such as science, accounting and mathematics; e. The first and sixth defendant [sic] were not operating a legitimate sports betting or trading business but a fraudulent scheme in which the loans from the plaintiff and the group members were: i. transferred off-shore to and for the benefit of the sixth to the tenth defendants, which were controlled by the eleventh and twelfth defendants or associates of them; 6 ii. transferred to and for the benefit of the eleventh and twelfth defendants; and or iii.